Banking Index Rises 3.16% as UBA, Zenith, ACCESS Soar
The Nigerian Exchange (NGX) witnessed a notable resurgence as the Banking Index surged by 3.16%, spurred by a wave of investor enthusiasm toward key banking stocks. This uptick halted a six-day slump, with banking giants such as United Bank for Africa (UBA), Zenith Bank, and Access Holdings leading the charge.
Healthy third-quarter earnings growth, bolstered by significant returns in the sector, fuelled a strong rally in banking stocks. Amid signs that yields on fixed-income securities have peaked, investors have increasingly turned to equities. “The strong earnings performance has shifted investor sentiment, drawing substantial buying interest in banking stocks,” noted a Lagos-based stockbroker.
UBA recorded an impressive 9.87% gain, with Zenith Bank following at 5.78% and Access Holdings rising by 4.89%. This robust demand has elevated the total market valuation of these top lenders to an impressive N5 trillion.
In total, trading activity soared, with the number of deals, trade volumes, and transaction value jumping by 2.82%, 194.37%, and 79.64%, respectively. Over 3.6 billion shares were traded in 10,679 deals, amounting to ₦25.57 billion in value. As Daba Finance observed, “With record-high interest rates, Nigeria’s top banks are well-positioned for continued stock gains, as elevated net interest income fuels earnings growth.”
The Central Bank of Nigeria’s recent policy rate hikes, raising rates from 18.75% to 27.25% over five sessions this year, have directly boosted net interest income for banks. Guaranty Trust Holding, Zenith Bank, UBA, and FBN Holdings all reported substantial gains, more than doubling their net interest income due to these higher yields.
Market analysts predict continued upside potential for major banking stocks. FBNQuest recently revised its forecast, projecting Zenith Bank shares to rise by as much as 42%, while Guaranty Trust’s shares are expected to gain nearly 11% by year-end.
Looking ahead, all eyes remain on the Central Bank’s policy meeting scheduled for November 26, as inflationary pressures mount. With Nigeria’s inflation rate hitting 32.7% in September, economists expect further rate adjustments, a prospect that could bolster banking profits even more. Dr. Awele Elumelu Calls for Women’s Leadership in Insurance
